This article was first published in the Wairarapa News in February 2012

Bank-created money is crippling local business. The interest due on any region's collective debt severely reduces our earning and spending power. It’s hard to imagine a currency less trade-friendly than one which incurs interest. The cost of money makes customers reluctant to spend it. Local traders – as long as they continue to focus on pulling in money – can never hope to match the suction power of the banks.

Our minds link money with wealth almost as soon as we learn to speak. Consequently, if we’ve been working for money for years, it may take time to appreciate that money makes us poor. But getting out of the debt hole – becoming a viable region – will not be possible until we adopt business-friendly means of exchange.

Rural communities have a long tradition of mutual assistance. Farmers team up to bring in one another’s hay. Commuters set up car pools. Neighbouring parents organise childminding circles. The crux of such arrangements is that none of them involves money. They are free exchanges.

The farmers, commuters and parents could pay one another in cash; given an equal workload, they might expect to all come out square. But money is created by profit-making private banks as a loan with an interest obligation, and everyone who handles money as it circulates back to the banks picks up a share of that debt. Choosing to use money would increase the cost even of haymaking, carpooling and childminding.

Our choosing to use money increases the cost of all goods and services.

Parties to a free exchange save themselves the cost of interest. It would be prudent and sensible to stop the haemorrhage of local wealth that interest represents by embracing pooling arrangements – by developing a variety of local pools and making the free exchange a standard business option.

A local pool can be as small as two individuals, or so big that it includes almost every business in the region. Small pools are relatively easy to establish; large pools offer a wide choice of products and services. What all such pools have in common, however, is a simple agreement between the individuals or businesses concerned:

·We dispense with payment between ourselves by keeping account of our mutual trade.

·We treat free exchanges as cash transactions for GST and income tax purposes.

·We ensure that any imbalance is kept within limits.

·We don’t charge one another interest on any imbalance.

·We settle up only when we stop trading.

Agreements to supply one another with goods and services in this way are the business-friendly currencies we will need to adopt to minimise the expense of bank credit. Every free exchange will help bring down our interest bill.

It’s not difficult for any of us to form a local pool. There’s no need to wait for any government or council directive. One question will point us to people with whom we can start pool-related conversations:

What can I (or my business) offer my neighbourhood – and what goods or services are produced locally that I would accept in exchange?

We all have something to offer, and we all have scope for initiative and leadership.

Jo, a hairdresser, establishes her first trading pool with a customer by proposing that Ken, an orchardist, pay for his haircuts in fruit. But as soon as they start inviting others into their pool, they can see that a pool accounting system will simplify the balancing of mutual obligations.

Rather than fill the salon with bags of apples, Jo makes a website so that members can access transparent pool accounts. Now, whenever Ken gets a haircut, $20 is added to Jo’s account and $20 deducted from Ken’s. Whenever Ken sells fruit to a member, the price is added to Ken’s account and deducted from the buyer’s.

The accounts are the pool’s own free-exchange currency. None of the amounts originates from a bank. No actual money ever changes hands within the pool. None of the members loses a cent through interest payments.